Optimistic prospects, realistic problems: the market generally expects that the global economy will recover and return to normal in 2022, and the world will open again in 2023. If the prediction of the epidemic is correct, we have no reason not to believe that the macro prospect is optimistic. However, the experience of the past year tells us that the impact of covid-19 epidemic on the economy is not one-time. Therefore, we give two scenario analysis. Scenario (I) covid-19 epidemic gradually weakened, global GDP growth slowed down orderly under the high base effect, and inflation eased in the second half of 2022. Scenario (II) covid-19 variant virus breaks out in the world, countries implement strict blockade and isolation measures again, and the interruption of supply chain leads to the deterioration of inflation. This will be the most pessimistic situation of the global economy, but China's economy will be relatively optimistic.
In the post epidemic era, China's economy has shown greater resilience: China is one of the G20 economies with the lowest proportion of imports in GDP, which means that it will not be vulnerable to supply shocks and import inflation. Similarly, China is also one of the countries with the lowest proportion of external debt to GDP, which means that it will be less vulnerable to the reversal of global liquidity conditions. At the same time, China's prudent monetary policy avoids potential liquidity driven asset bubbles compared with other countries. In fact, we estimate that after one year of deleveraging, China's macro leverage ratio has decreased by about 10 percentage points, which is in strong contrast to the sharp increase in leverage ratio among epidemics in other countries. Therefore, China has more policy space to stimulate the economy than other countries.
2022 will be a year when China's steady economic growth is superimposed on long-term high-quality development: we believe that China's grasp and operation of counter cyclical macro-control has been more mature than developed countries. At present, China's economy is entering a turning point where fiscal and monetary policies return to normal, and the overall macro policy will be looser than this year. After a sluggish year, the growth of fixed asset investment is expected to rise next year, especially the basic investment related to green economy and high-end manufacturing, which not only partially offset the drag of the real estate downturn, but also in line with the long-term development goal of the 14th five year plan. We expect that China's economy will reach the bottom in the first quarter of 2022 and have a more obvious recovery in the second half of the year, from the bottom to the top.
The U.S. economy continues to recover, but the risk of overheating gradually increases: most of the recovery power in 2022 comes from replenishing inventory. We predict that it will take at least two years to restore the inventory sales ratio close to the historical low in the United States to the trend level. However, it is expected that the US economy will rise first and then fall in 2022. This is not purely a base effect, but also because the policy has repaired the output gap rapidly, resulting in the risk of early overheating of the economy. Although the recovery of the supply chain will reduce inflationary pressure, the demand growth caused by wage growth and wealth effect will not let inflation decline too fast. In order to prevent the inflation expectation center from moving upward, we cannot rule out the Federal Reserve to accelerate tightening policy. The biggest risk remains repeated outbreaks, which will lead to stagflation and put the fed in a dilemma.
